The Economic Impact of Hurricane Katrina on its Victims: Evidence from Individual Tax Returns By TATYANA DERYUGINA, LAURA KAWANO, AND STEVEN LEVITT* Hurricane Katrina destroyed over 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane’s long-term economic impact on its victims. Hurricane Katrina had large and persistent impacts on where people live, but small and surprisingly transitory effects on employment and income. Within just a few years, Katrina victims’ incomes actually surpass that of controls from similar unaffected cities. The strong economic performance of Hurricane Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning. *Deryugina: University of Illinois at Urbana-Champaign and NBER, 4049 BIF, 515 E. Gregory Dr., Champaign, IL 61820,
[email protected]; Kawano: Office of Tax Policy Research, University of Michigan, 701 Tappan, Rm. R5380, Ann Arbor, MI 48109,
[email protected] (formerly at Office of Tax Analysis, U.S. Department of Treasury); Levitt: University of Chicago and NBER, 5807 S Woodlawn Ave, Chicago IL, 60637,
[email protected]. The views expressed in this paper are those of the authors and do not necessarily reflect the policy of the U.S. Department of Treasury. We thank Michael Stevens for assisting in revisions, and to Jesse Gregory, Bruce Sacerdote, and participants at the ASSA, AAEA, and SEA meetings, the University of Illinois at Chicago, the NBER EEE Summer Institute, an the NBER Public Economics Spring Meeting for helpful comments. Eric Andersen, Hancong Gao, Bryan Ho, Erin Robertson, and Zhengjie Xu provided excellent research assistance.